Economic Snapshot for the Nordic Economies

August 28, 2019

Growth in the Nordic Economies to slow in 2019

Regional growth is expected to slow this year, partly on a weaker global backdrop, especially in the Eurozone, and rising trade tensions between China and the United States. That said, economic dynamics will differ across the region: While growth is projected to slow in Iceland, Finland and Sweden, the Danish and Norwegian economies are seen strengthening.

Nordic Economies Financial & Monetary Sector News

Regional inflation decelerated for the third consecutive month in July to 1.4% (June: 1.5%), as price pressures moderated in all Nordic countries in July except in Norway. As a whole, regional inflation is expected to average lower this year on weaker inflationary pressures in Norway and Sweden, even though inflation is seen accelerating in Denmark, Finland and Iceland.

Monetary policy appears to be turning more dovish. Norges Bank kept interest rates unchanged in August, after raising rates in June, partly on low inflation and a worsening global economic backdrop. Moreover, an economic contraction in Sweden in Q2 has raised doubts about the Riksbank’s willingness to raise interest rates again in the short-term.

The Icelandic and Swedish currencies weakened in recent weeks against the euro on poor economic data, while the Norwegian currency lost ground on lower oil prices. At the end of this year, the Icelandic and Swedish currencies are seen depreciating compared to the end of 2018; the Norwegian krona should strengthen, however.

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Total industrial production excluding energy notched growth of 1.4% in July over the prior month in seasonally- and calendar-adjusted terms, contrasting June’s revised contraction of 1.0% (previously reported: -1.1% month-on-month).

Business confidence among firms in the industrial sector increased to minus five points in August from minus seven points in July, according to a survey conducted by Denmark’s Statistical Institute, due to an improvement in output expectations.

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